Mumbai: The RBI has included Tata Sons and Dilip Shanghvi’s Shanghvi Finance in the list of 16 NBFCs which will come under more scrutiny. While most large NBFCs were expected to be part of the list, the investment vehicles being included comes as a surprise.
Under this ‘upper layer’ NBFCs (NBFC-UL) category, the RBI identifies companies based on a set of parameters and scoring methodology for more regulation and supervision. Besides Tata Sons and Shanghvi Finance the others in the list are LIC Housing Finance, Bajaj Finance, Shriram Transport Finance, L&T Finance, Indiabulls Housing, Piramal Capital & Housing, Cholamandalam Finance, M&M Finance, PNB Housing, Tata Capital, Aditya Birla Finance, HDB Finance, Muthoot Finance and Bajaj Housing Finance.
Despite appearing in the list of top 10 NBFCs in terms of asset size, HDFC is not being included in the list of NBFC-UL in the current review due to the ongoing merger process.
The NBFCs in the list must put in place a board-approved policy for adoption of the enhanced regulatory framework applicable to NBFC-UL and chart out an implementation plan for adhering to the new set of regulations within three months from the date of this press release, the RBI said.
Further, the boards of these NBFCs must ensure that the stipulations prescribed for the NBFC-UL are adhered to within a maximum 24 months from the date of the Friday press release.
The RBI had issued the scale-based regulation (SBR), which is a revised regulatory framework for NBFCs, on October 22 last year. The framework categorises NBFCs in base layer (NBFC-BL), middle layer (NBFC-ML), and the NBFC-UL. There is a top layer (NBFC-TL) too. It specifies that UL shall comprise those as provided in the framework. The framework also envisages that top 10 NBFCs in terms of their asset size shall always reside in the UL. Accordingly, the NBFCs have been identified for categorisation as NBFC-UL under the framework.
Under this ‘upper layer’ NBFCs (NBFC-UL) category, the RBI identifies companies based on a set of parameters and scoring methodology for more regulation and supervision. Besides Tata Sons and Shanghvi Finance the others in the list are LIC Housing Finance, Bajaj Finance, Shriram Transport Finance, L&T Finance, Indiabulls Housing, Piramal Capital & Housing, Cholamandalam Finance, M&M Finance, PNB Housing, Tata Capital, Aditya Birla Finance, HDB Finance, Muthoot Finance and Bajaj Housing Finance.
Despite appearing in the list of top 10 NBFCs in terms of asset size, HDFC is not being included in the list of NBFC-UL in the current review due to the ongoing merger process.
The NBFCs in the list must put in place a board-approved policy for adoption of the enhanced regulatory framework applicable to NBFC-UL and chart out an implementation plan for adhering to the new set of regulations within three months from the date of this press release, the RBI said.
Further, the boards of these NBFCs must ensure that the stipulations prescribed for the NBFC-UL are adhered to within a maximum 24 months from the date of the Friday press release.
The RBI had issued the scale-based regulation (SBR), which is a revised regulatory framework for NBFCs, on October 22 last year. The framework categorises NBFCs in base layer (NBFC-BL), middle layer (NBFC-ML), and the NBFC-UL. There is a top layer (NBFC-TL) too. It specifies that UL shall comprise those as provided in the framework. The framework also envisages that top 10 NBFCs in terms of their asset size shall always reside in the UL. Accordingly, the NBFCs have been identified for categorisation as NBFC-UL under the framework.
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